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Ben Dobson, Reform, says don’t throw the baby out with the bathwater with the Work and Health programme

05 August 2016

The Conservative manifesto pledged to halve the disability-employment gap, citing the need to “transform policy” so that “hundreds of thousands more disabled people” find employment. The more cynical may have noticed that this rather understates the task at hand – halving the gap will require moving at least 1.2 million more disabled people into work.

The size of the Work and Health Programme, an expected £120 million a year, represents a switch away from the Work Programme model. Instead the Government is reverting back to greater reliance on Jobcentre Plus (JCP). But even with plans to double the number of JCP disability-employment advisers, this is an inadequate response to such an ambitious pledge.

The Work Programme model enables the involvement of a diverse range of specialist providers to meet the needs of claimants with often complex needs. It also enables financial risk to be shifted away from the taxpayer through use of Payment-by-Results (PbR). JCP enables neither. Moreover, the Work programme delivered: in 2014, the NAO reported that the Work Programme had achieved comparable performance to previous programmes but at a lower cost.

There is, however, clear room for improvement. Performance for the hardest-to-help claimants in the Work Programme, though as good as any previous programme, remains low. The programme in reality did not deliver enough incentive for providers to work with those at a large distance from the labour market. But if the Government is serious about halving the disability employment gap, it should not scrap a model shown to be effective, but should instead build on it. At the same time, the Government must address the demand side, so that improved employment services can support people into work with responsive and confident employers.

Reform’s new report, published last Tuesday, presents a set of recommendations for turbo-charging the Work programme model and supporting employers to recruit and retain disabled people.

Firstly, sharper incentives are needed to move the hardest-to-help into work. This means increasing the overall funding envelope and more intelligently distributing funding between participants.

At present, the amount the Government is willing to spend on moving the long-term unemployed back to work is significantly lower than the savings they would make for doing so. Returning to the ‘AME/DEL’ switch intended for the Work Programme – whereby programme spend is funded by the future savings of reducing the welfare rolls – would allow funding to significantly increase in a fiscally prudent way.

The distribution of funding between different participants must also be addressed to incentivise working with those furthest away from the jobs market. The ERSA-backed ‘accelerator’ model – which pays providers an incrementally higher fee per job outcome as providers move further into the cohort – would mean higher funding is always available for the hardest to help. A strengthened version of this model, in which payment increases are increasingly large and the number of job outcomes needed to move to the next target decreases, would ensure funding is always proportionate to the significant investment providers must make to succeed with those furthest from work.

Secondly, greater innovation is needed to build an evidence base of the most effective interventions. The Work Programme’s black box was intended to facilitate this, but restrictive minimum service levels and tight profit margins have led to less innovation than perhaps anticipated. Providers should, therefore, be able to bid for funding to pilot new methods. This ‘skunkworks’ funding would be for a small group of their cohort and would be dependent on providers submitting details of genuinely innovative approaches, the success of which would be thoroughly assessed and reported by the Department. The funding available per participant would be slightly higher, to incentivise participation, and performance metrics would be more lenient, in recognition that genuine innovation requires some degree of risk.

These improvements could make a big difference in helping more people into work. But to deliver change on the scale the Government is targeting, businesses must also play a greater role.

So thirdly, the Government should marry its pledge to halve the disability-employment gap with its aim deliver three million more apprentices by 2020. To do this, the Government should increase the funding available to employers and training providers who take on disabled apprentices, and remove the age-related criteria for this group.

Finally, the Government must give the Disability Confident campaign teeth. At present, of the 376 businesses that are registered, only 68 actually do anything to help more disabled people into work. Registered businesses should be required to perform against a framework of formal standards, including, for example, offering work experience placements for disabled people. A publically-available ranking, akin to the Stonewall Index for LGBT employees, should also be used to assess businesses’ inclusivity for disabled people.

Progress on the Government’s pledge has been woeful, with the Learning & Work Institute recently estimating that it will take 200 years to achieve at current performance. Now is absolutely not the time to cut funding and revert to a JCP-led model. Instead, the Government must ‘turbo-charge’ the existing model and call on businesses to do more. Our recent report explores in detail how this should be done.